Why Sonos Stock Gained 20.9% in January

A stock market rebound and interest in the company's product pipeline helped the home audio specialist post double-digit gains last month.

Keith Noonan
Keith Noonan
Feb 11, 2019 at 6:26PM
Technology and Telecom

What happened

Shares of Sonos (NASDAQ:SONO) gained 20.9% in January, according to data from S&P Global Market Intelligence. The speaker company lost roughly a third of its value as stocks struggled in 2018's final quarter, but momentum for the broader market helped its share price see some recovery early in 2019.

SONO Chart

SONO data by YCharts.

In addition to riding the broader market's momentum, Sonos stock also appears to have gotten a boost from news about upcoming products in the company's pipeline. Sonos held its initial public offering early in August, pricing its stock at $15 per share. Subsequent pricing has been volatile, as the market has attempted to plot out its growth potential in the smart speaker space. Shares currently trade in the $11 range.

Check out the latest Sonos earnings call transcript.

A Sonos surround sound system.

Image source: Sonos. 

So what

Filings made public by the Federal Communications Commission early in January showed that Sonos has a new smart speaker in the works, and public demos for Google Assistant support at CES 2019 and reports that the company is planning to launch a high-end headphone line may also have helped buoy the stock. Morgan Stanley also published a note on Jan. 28, raising its rating on Sonos stock from equal weight to overweight and issuing a $15 price target. 

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Now what

Sonos stock has given up some of its January gains in February, with shares trading down roughly 7.3% this month so far. 

SONO Chart

SONO data by YCharts.

The company published first-quarter results after market close on Feb. 6. The earnings release delivered profits that topped expectations, but it was paired with the news that the company's chief financial officer would be departing. Sales for the quarter climbed 6% year over year to reach $496 million and adjusted EBITDA rose 34% compared to the prior-year period to hit $87 million. 

Sonos is valued at roughly 41 times this year's expected earnings and 0.9 times expected sales.